Stock Market -- what a difference a couple of days makes

Who was depressed? Long term investors have done pretty well. Don't be in such a rush to divest. Over the long haul those big rises and falls turn into little bumps on the highway of life. No problem.

You forget that there are hundreds on this board who listen to Flagpole's finacial wisdom and act on it. At least that's what Flagpole seems to think.

Lane wrote:

Who was depressed? Long term investors have done pretty well. Don't be in such a rush to divest. Over the long haul those big rises and falls turn into little bumps on the highway of life. No problem.

Well, YOU have the right attitude, but not everyone here did. Lot of people get down when the market is down. Not me though brother! That just means stocks are cheap.

winston churchill wrote:

You forget that there are hundreds on this board who listen to Flagpole's finacial wisdom and act on it. At least that's what Flagpole seems to think.

No, they don't. The thing is though that they SHOULD be. The average amount of money invested for a 45-year-old man today is $25,000. That is inexcusable.

flagpole- i'll go ahead and give you credit for chiming in a lot with sound and intelligent financial advice, and acting as one of the few voices of reason when others have no clue what's going on, but i think i speak for many when i say we don't need you updating us with your personal year to date investent performnce every time there's a turn in the market. we don't care, and frankly, it's a little hard to believe that someone who preaches the virtues of a safe, diversified portfolio would be outperforming the S&P 500 by nearly 700bps so far this year! if you're really doing that, and think you could do it again, there's fabulous wealth waitng for you in the hedge fund world.

i do enjoy most of your posts, and agree with your general outlook that for the young investors on the board, who are bound to be net buyers of stocks in the years to come, that a down market is nothing but a buying opportunity, a nice entry point.

Nicely said.

Economists have worked on Flagpole's obsession for years, an individual's optimization of lifetime consumption. It seems that most people strive for a flattening of consumption, whereas Flagpole has very definite time preference for consumption favoring the later years of life. That's fine, maybe even noble, but it is simply not reality for most. Millions of people have much higher incomes than Flagpole, they can consume at much higher levels than he can and still reach retirement with a much bigger pile of assets. Many more millions will suffer a bit in old age because they are not as focused on retirement as Flagpole. Such is life, it takes all sorts to make a society as complex as modern America.

alright already wrote:

we don't care, and frankly, it's a little hard to believe that someone who preaches the virtues of a safe, diversified portfolio would be outperforming the S&P 500 by nearly 700bps so far this year!

I actually was interested in hearing his portfolio returns(and others) but I agree 100% that outperforming the S&P 500 by such a large margin is odd given what Flagpole normally preaches.

Anyway, he and I have been back and forth on this and I'm done discussing it. If he's up that much, good for him.

The fed is forced to cut. If not the market would drop 500 pts that day. Keep pumping that cheap greenback!

SGMO, buy buy buy!

you realize the recent run-up is on SPECULATION of a rate cut by the Feds?

The market is not exactly mirroring the economy at the moment. Yes there is a two day up trend but overall people have less money with credit tightening and home prices wavering. I expect the next year or so to move sideways or slowly down as the economy adjusts.

I disagree with the Subject Heading. A couple of days makes basically no difference for most investors. If you bought a lot of stock on Monday and sold it yesterday, yes you made some nice change. But most investors didn't do that, and those that do almost always get burned eventually, because it's simply not possible to consistently time the market. Two years from now if you look at a stock price chart, you'll see some squiggly lines for November 2007, but the overall trend won't be affected.

Your investment strategy should be based on age, financial goals, and life situation, not on what you think the market is about to do.

Flagpole KNOCK ON WOOD.

what are you doing? You're jinxing us. Stop please. thankyou.

my PRR YTD is 26.6%, but I've also had a real good split in my company stock; not at all upset with the market now.

Safe and diversified don't necessarily go together brother. Safe would be all in Bonds or some other low-risk vehicle. Diversified, especially for a person such as myself still 18 years away from retirement still means a LOT of money in growth stocks -- international stocks and so on, but yet enough in the lower end stuff to not cause havoc if there were a drop.

My Fidelity Contrafund (which invests primarily in COMMON Stocks) is up 19.06% YTD as of end of business yesterday. Not that tough to be up just under 12% on the year with that in there and with the International fund in there too that has done 16.91% YTD. DIVERSIFIED HAS TO INCLUDE INTERNATIONAL STOCKS! Who said diversified means SAFE?! Not me.

i dunno much about economics, but what does this all mean when stock market does well but the value of the dollar continues to go down?

Gasbag wrote:

Economists have worked on Flagpole's obsession for years, an individual's optimization of lifetime consumption. It seems that most people strive for a flattening of consumption, whereas Flagpole has very definite time preference for consumption favoring the later years of life. That's fine, maybe even noble, but it is simply not reality for most. Millions of people have much higher incomes than Flagpole, they can consume at much higher levels than he can and still reach retirement with a much bigger pile of assets. Many more millions will suffer a bit in old age because they are not as focused on retirement as Flagpole. Such is life, it takes all sorts to make a society as complex as modern America.

1) Investing for one's future is not a reality for most because either people are too stupid to do the math and realize that 15% of one's salary into retirement accounts doesn't take away 15% of one's take home pay, OR they have spending habits that are out of control. I'd like to know why YOU think it is not a reality for most.

2) Yes there are people who make more than I do. I have a brother who makes 4 times what I do, and he's poor because he spends every freakin' dollar he makes and is up to his eyeballs in debt.

3) When people strive for "flattening" of consumption, really what that means is that they want to spend all their money now and not save it for the future.

4) In my case, I am NOT putting all my spending off until my retirement years. Because I don't pay interest on loans for ANYTHING except my house, I have WAY more disposable income NOW even though I put a ton away for retirement than most people with my income(and higher) who DON'T put anything away for retirement. Why? I'm not paying 5% or more on a car loan or some ungodly interest rate each month on a credit card balance that I can't pay off or student loans that I've decided to keep around forever. Also, because I manage my money well, my wife doesn't have to work while the kids are young, and then we don't end up shelling hundreds of dollars out each month for child care, extra money on gas for her to get to work, lunches out ocassioanly for her, etc. Believe it or not, but if you get your financial crap together, not only can you spend a lot when you retire, but you can spend a lot more NOW. I spend WAY more money now than I could if I were deeply in debt.

Everyone SHOULD be focused on retirement from the minute they start making money. If you have had some luck with the stock market and you've put a ton away and you hit age 50 with a shitpile of money, then you can either retire early or take that dream job that pays way less, or stop investing then at all for a big income increase, or whatever. If you start early, you can always stop investing if there are hard times, but what you can't do is wait until you're 50 and be able to easily make up for all that lost compounding time.

Weasel post.

If the bulk of your stock holdings were at Vanguard, a preference you have stated, you would not be enjoying the contrafund return. Still a statistical improbability that a self-proclaimed diversified investor like you has "most" of your stock assets in outperforming Fidelity funds. At best you got lucky in 2007 at Fidelity. BFD.

Fidelity has way outperformed on a surprising number of their managed funds this year. Good for them, but this is most certainly a case where mean reversion is operative. I think Fidelity managers made a correct shift away from USD assets, and did their best to own US stocks that would benefit or at least not get crushed by the dollar's perfromance. Your actual holding of international stock may be quite a bit higher than normal. Hopefully they don't get caught out if and when things swing the other way.

BTW, the Fed jawboning about lower interest rates may lead to short term run ups in the stock market, but on a long term basis it is no reason to celebrate, quite the opposite. I'm hopeful Bernanke and crew can navigate through these treacherous waters, but it it far from certain.

No, flattened consumption is a reasonable middle ground.

You are way out on the extreme end of personal preference.

As I've said, good for you, not a problem, but most people who choose a more flattened approach to lifetime consumption do just fine in retirement.

Of course there are hordes at the other extreme spending every penny, or without the income to save much at all no matter how careful. That's a shame.

Where relationships workout wrote:

you realize the recent run-up is on SPECULATION of a rate cut by the Feds?

The market is not exactly mirroring the economy at the moment. Yes there is a two day up trend but overall people have less money with credit tightening and home prices wavering. I expect the next year or so to move sideways or slowly down as the economy adjusts.

Yes, I realize that. Though the likely Fed rate cut isn't the ONLY thing making the market go up. Also, you're right that the market isn't mirroring the economy right now. The economy is BETTER than the market shows. P/E ratios point to a rising market, not a declining one.

Regarding credit tightening, I say GOOD. People with no means and poor payback history should not be given loans. The banks and the people who took those loans out should be suffering. I hope they've all learned their lessons.

Also, why should a dropping house price make people spend less money? The only ones who spend less due to a drop in housing prices are builders, or people who bought a lot of real estate hoping to sell them and make money, OR (and these are the losers among them) people who use the home equity to buy things. If people would quit treating their homes like a bank, they would be better off. Bottom line is if you got a $150,000 mortgage in 2000 and pay $1200 a month on it in a fixed rate loan, and by 2004 your house was worth $210,000 but is now back down to being worth $175,000, then your montly payment for that house didn't change at all. I don't feel bad for people who bought houses they couldn't afford in hopes that they could sell them in a couple years for a big profit. That's a big gamble they took. Shouldn't buy a house if a swing in the market could make you broke.

Gasbag wrote:

No, flattened consumption is a reasonable middle ground.

You are way out on the extreme end of personal preference.

As I've said, good for you, not a problem, but most people who choose a more flattened approach to lifetime consumption do just fine in retirement.

Of course there are hordes at the other extreme spending every penny, or without the income to save much at all no matter how careful. That's a shame.

The problem you have is that you think I'm way out on the extreme. That couldn't be further from the truth. I recommend advice that ANYONE can follow if they don't constantly needlessly spend.

15% of your money off the top goes to retirement accounts. If you're 45 or older and you haven't been investing, you'd better be investing more -- up to the max allowed and then in other vehicles if you need to.

Dude, that is hardly extreme. Many economists are saying people right out of college should be doing 18%.

You are mistaken about retirement. Studies show that most people who reach retirement age haven't done enough saving to have a fruitful retirement. People in their 60s like to have fun and spend money too. My parents go to Europe every year and then travel around the US. They can because of a combination of a pension, Social Security and some investing. I want to be able to do what they are doing, but I will not have a pension, and my Social Security could be greatly diminished, so I have to make up for the difference with the investing.

Then, you have to decide what retirement age is. US government says that 67 is it for full retirement, but damn, I don't want to work full-time until 67 if I don't have to. If you invest enough of your money, then YOU get to decide when retirement age is. I say it's 59 1/2.